What is the current state of U.S.-Saudi relations?

Very strained. Because of mutual mistrust and suspicion, created by the war on terror and intensified by a recent congressional report that allegedly raised questions about Saudi links to extremists, "this is the worst things have been [between the two countries] since the oil embargos of the '70s," says F. Gregory Gause III, director of the Middle East Studies Program at the University of Vermont.

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Why are relations so strained?

Many Americans don't believe Saudi Arabia is on the same side as the United States, says Rachel Bronson, director of Middle East and

Gulf Studies at the Council on Foreign Relations. Most Americans and many members of Congress, she says, believe that Saudi Arabia is not doing enough to curb terrorist financing and Islamic extremism at home and--in particular--abroad. "There's a feeling that [the Saudis aren't] stepping up," she says. Reported links between Saudi Arabian government officials and terrorist financing in the congressional report on 9/11 have exacerbated tensions.

How does it look from the Saudi side?

Some experts say that average Saudis are resentful and suspicious of the United States. From their point of view, Saudi Arabia has made a concerted effort to unearth local al Qaeda cells and took significant risks in the first and second Gulf wars by making staging areas and military bases available to U.S. forces. The widespread perception, experts say, is that Saudis are being rewarded for their pains by a lackluster U.S. effort on the foreign policy issue they care most about, peace between Israel and Palestine.

What's at stake?

The United States "can't do without Saudi Arabia," says Robert Baer, author of "Sleeping with the Devil: How Washington Sold Our Soul for Saudi Crude." "It's crucial to our national interests," says Baer, a former CIA field officer and a harsh critic of the Saudi government. Saudi Arabia controls 25 percent of the world's oil reserves and is one of the largest suppliers of crude oil to the United States, providing nearly 10 percent of total U.S. needs. Baer says Saudi Arabia, over the last 30 years, has adjusted production to maintain stable prices and sold oil to the United States on favorable terms in exchange for U.S. military protection. U.S. troops were stationed in Saudi Arabia after Saddam Hussein invaded Kuwait in 1990. Their presence was a contentious issue--Osama bin Laden was infuriated by "infidels" in Islam's birthplace--and most of the troops are being shifted to a base in Qatar.

What can be done to repair relations?

Many experts say that Saudi Arabia must be more forthcoming and transparent about sharing information with the United States in the fight against terrorism and monitoring terrorist funding. "In Saudi Arabia, it's not clear what the distinction is between private and public funding," says Bronson, a situation that casts doubt on the royal family, which controls most of the country's money. "Do they know where their money is going?" she asks. "Do they care?" Bronson says the United States must carefully rethink its relationship with Saudi Arabia and question if the parameters of the old alliance continue to be useful. "During the Cold War, the relationship had utility: We fought communism together, in the Middle East, in Central America, everywhere," she says. "Now, it's not clear that we have the same interests, friends, or enemies. Driving this relationship on autopilot will not work. When the Cold War ended, the rules of the game changed."

What was the bilateral relationship based on in the past?

Traditionally, country-to-country relations were conducted at senior levels and aimed at protecting national interests, says Gause--oil for the United States and military guarantees for Saudi Arabia. But there is no popular constituency for the relationship in either country, and lately domestic groups--neoconservatives and the religious right in the United States, fundamentalist clerics in Saudi Arabia--are agitating against the traditional relationship.

What anti-terror steps has Saudi Arabia taken?

Many Americans were disappointed by the initial Saudi reaction to the 9/11 terror attacks. Saudi officials insisted that the hijackers, 15 of 19 of whom were Saudi nationals, were isolated malcontents. The interior minister, Prince Nayaf, had denied that al Qaeda existed in Saudi Arabia. His stance shifted somewhat after the May 12, 2003, terror attacks in Riyadh that killed 34 people, including 8 Americans, and wounded more than 200 others. Since then, Saudi Arabia has moved much more aggressively against internal terror groups, setting up nationwide checkpoints and arresting hundreds of suspects in raids. A raid in Riyadh on August 12 resulted in five arrests after a gun battle in which three police officers were killed. Experts point out that the Saudi royal family is as much a target for al Qaeda as is the United States and it has an incentive to cooperate fully with the U.S.-led war on terror.

How much of the current tension is due to the congressional report on 9/11?

Quite a lot. Twenty-eight pages of the 858-page report, released on July 24, were blacked out. Some who have read the classified pages say they link Saudi government officials and members of the royal family to the financing of terrorist groups; others say the alleged links are based on circumstantial evidence only. Congressional leaders have been increasingly vocal in their demands that the report be declassified. "There is considerable concern here in the Congress about Saudi Arabia being shielded for foreign policy purposes," Senator Arlen Specter, R-Penn., told The New York Times on July 31.

Have Saudis funded terror networks?

In accordance with the Muslim custom of donating to the needy, wealthy Saudis routinely give money to Islamic charities and causes. Some of these funds, it has been alleged, directly or indirectly support terrorist activity. In November 2002 it was revealed that part of a charitable donation made by Princess Haifa al-Faisal, the wife of the Saudi ambassador to the United States, made its way to Omar al-Bayoumi, a friend of two of the 9/11 hijackers.

How has Saudi Arabia reacted to the 9/11 report?

Saudi officials have pushed for the release of the classified pages, saying they have a right to defend themselves against any accusations. Prince Saud al-Faisal, the Saudi foreign minister, flew to Washington on July 29 to ask President Bush to declassify the pages; Bush refused. The administration contends that making the pages public could jeopardize ongoing terror investigations.

Who is Omar al-Bayoumi?

A Saudi national who studied in the United States from 1994-2000 on a Saudi government fellowship. He befriended two of the 9/11 hijackers, Khalid al-Mihdhar and Nawaf al-Hazmi, in San Diego in late 1999. According to Newsweek magazine, al-Bayoumi met the two men on the day they arrived, helped them get bank accounts and identity documents, and helped arrange flying lessons for them at flight schools in Florida. He also lent them money for the deposit on their apartment and hosted a party to introduce them to the Arab community. His allowance from the Saudi government allegedly increased substantially after he met the two Qaeda members; U.S. government investigators want to know why. After leaving the United States months before 9/11, al-Bayoumi spent time in Britain and then returned to Saudi Arabia. He was questioned by FBI officials there last week in a joint investigation with Saudi officials.

Is Saudi Arabia sponsoring terrorism?

On a state level, emphatically not, says Gause. "I'm not convinced that anybody high up in the Saudi government, as a matter of policy, would want to finance hijackers," he says. He says that, for the royal family, supporting Osama bin Laden would be like "slitting your own throat." However, "without increased transparency and accountability, there will always be suspicion," Bronson says. There is widespread public support in Saudi Arabia for much of bin Laden's anti-Western, anti-Israel rhetoric, and many individuals agree with bin Laden's criticisms of U.S. power and corruption in the Saudi royal family. But, Gause says, very few Saudis would condone his methods. This is especially true after the May 12 bombings, which brought home to the close-knit Saudi society the bloody reality of terrorism.

What domestic political pressures does the Saudi regime face?

The Saudi regime has been led by Crown Prince Abdullah bin Abdul-Aziz since a 1995 stroke debilitated 82-year-old King Fahd. Abdullah is seen as a cautious reformer who has scaled back some of the excesses of the free-spending royal family and introduced more openness into politics. At the same time, the conservative religious establishment has grown more radical and fundamentalist. Recently 1,000 imams around the country were relieved of their posts for preaching incendiary messages and brought to Riyadh for re-education in, among other things, tolerance for non-Muslims.

The government has societal forces to deal with as well. The unemployment rate is 25 percent, gross domestic product per head has fallen to about $10,500 last year from $18,000 in the 1980s, and 42.3 percent of the country's population of 24 million is under 14 years old, according to the U.S. State Department. Societal restrictions on women--they are not allowed to drive or leave home alone--minimize their participation in the workforce; one-third of all workers are foreigners, most of whom send a portion of their pay home as remittances. College-educated Saudis are finding that the social safety net, which all but guaranteed them good jobs with the government, is failing. Young, restless, and unemployed, this group is both a force agitating for change and a ready market for bin Laden's revolutionary rhetoric.

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